Is Finance Socially Useful?
Two nights ago, I chaired a panel discussion on global finance at Queen's University. The audience was full of students who want to work in well-paying jobs in the financial sector. But is it in society's interest that so much talent ends up in the financial sector? Robert Shiller argues in this op-ed that bright graduates who engage in speculation, deal-making and trading play a socially useful role in allocating funds to the best and most productive businesses. However, he also argues that many speculators, deal-makers and traders engage in pure rent-seeking activities, whereby they simply extract wealth from others rather than create wealth in the first instance. Such activity can actually be socially harmful. In other words, finance is socially useful, but up to a point.